Increasing Energy Efficiency
From an article in today's NY Times titled A Country Less Dependent on Oil Is Free to Make Other New Year’s Resolutions: "A great many folks wish the economy would go on a diet, too, and stop using so much energy."
Well it has, as the graph above shows. In 1949, we used 19,500 BTUs per real dollar of GDP produced. We now use fewer than 9,000 BTUs for every dollar of GDP, a 54% reduction in the energy consumption per dollar of real output over the last 50 years.
The significant increase in energy efficiency has insulated the US economy somewhat from energy shocks. After all, consider that in January of 1999, just eight years ago, oil was trading at $9.50 per barrel and gasoline was below $1 per gallon, see the data here. In nominal dollars, oil prices went from less than $10 to $70 in eight years, a 7X increase, with very little adverse effect on the U.S. economy. Compare that the economic disasters in the 1970s during the oil shocks went oil prices "only" doubled. The relentless increase in energy efficiency has helped a lot to insulate the US economy from oil shocks.